PSU stocks will continue to lead the market rally, says ace investor Ramesh Damani

Ramesh Damani was speaking at the Rising Bharat Summit 2024.

Each bull market is all about leadership, and the current bull market in India is partly led by public sector undertaking (PSU) stocks, Ramesh Damani, veteran investor and member of BSE, said during the Rising Bharat Summit in Delhi.

“The PSU sector will continue to lift the market higher due to the leading edge of capital expenditure, improved corporate governance and reasonable valuations for most PSU stocks,” Damani said during the event on March 19. The S&P BSE PSU Index has surged 38 percent in the last six months.

On the recent market correction, the seasoned investor said that there's always some froth in the market and doesn’t believe that it is close to bubble territory. Recently, SEBI’s chairperson Madhabi Puri Buch said that there is froth in the market and advised mutual funds to safeguard investors. The market regulators' glare towards exuberance in small and mid-caps has also triggered a sharp selloff in the broader market including PSUs. The 9 percent decline in the PSU index in the past month is a case in point.

However,  Damani believes that there is volatility but not risk. “Current volatility is a winter snow that’ll soon pass by.” Damani also said that all bull markets come to an end, and the current one may do as well. But for now it seems that there is a green signal ahead and the market is at a reasonably good state, he said.

On the recent news surrounding privatisation of PSUs, Ramesh Damani said that there is some expectation that the government will privatise a few assets and the larger market will remain focused on reducing corruption, and improved corporate governance.

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